The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. The form also contains newly updated forms that comply with the most recent stimulus law.
Congress approved the COVID-19 relief package in the month of March, which included $284 billion of financing to small businesses that needed loans. The money was intended to mitigate the economic effects of the coronavirus pandemic. The law requires that the SBA release simplified forms within the first 24 hours of the legislation’s signing into law. This is to simplify the process of applying for forgiveness. It also included conditions that encourage community banks to make more loans particularly to minority-owned businesses who were unable to obtain loans last year.
“The Small Business Administration met the requirement of releasing the single-page form for loan forgiveness under the PPP within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released updated forms.”
First Draw PPP Conditions for loan forgiveness
PPP Loan Forgiveness Application Number Of Employees – First Draw PPP loans granted to borrowers who are eligible can be granted full loan forgiveness if within the 8 to 24-week covered period following loan disbursement:
- The same goes for the employee compensation and the.
- The loan proceeds are used on payroll expenses and other expenses that are eligible and
- A minimum of 60% of the profits go towards payroll costs
Second Draw PPP Conditions for loan forgiveness
Second Draw PPP loans made to borrowers who are eligible can be granted total loan forgiveness if they do so during the 8– to 24-week duration following loan disbursement:
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exactly the same manner.
- The proceeds of the loan could be used to pay for payroll costs or other eligible expenses.
- Minimum 60% of profits go towards expenses for payroll
- How do I apply for loan forgiveness and when to apply
When all of the loan’s proceeds have been used The borrower may apply for forgiveness. Borrowers can request forgiveness at any point up to the date at which the loan matures. If the borrower does not apply for forgiveness within 10 months after the last day of the time period that was covered, then PPP loans are no longer deferred and borrowers must make loan payments to their PPP lender.